11 Dealing with Competition Marketing Management 13 th

11 Dealing with Competition Marketing Management, 13 th ed

Chapter Questions • How do marketers identify primary competitors? • How should we analyze competitors’ strategies, objectives, strengths, and weaknesses? • How can market leaders expand the total market and defend market share? Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -2

Chapter Questions (cont. ) • How should market challengers attack market leaders? • How can market followers or nichers compete effectively? Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -3

Progressive Competes on Marketing Programs Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -4

Figure 1. 1 Five Forces Determining Segment Structural Attractiveness Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -5

Identifying Competitors Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -6

Industry Concept of Competition • Number of sellers and degree of differentiation • Entry, mobility, and exit barriers • Cost structure • Degree of vertical integration • Degree of globalization Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -7

Figure 11. 2 Strategic Groups Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -8

Figure 11. 4 A Competitor’s Expansion Plans Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -9

Table 11. 1 Customer Ratings of Competitors on Key Success Factors Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -10

Strengths and Weaknesses Share of market Share of mind Share of heart Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -11

Steps in Benchmarking • Determine which functions or processes to benchmark • Identify the key performance variables to measure • Identify the best-in-class companies • Measure the performance of best-inclass companies Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -12

Steps in Benchmarking (cont. ) • Measure the company’s performance • Specify programs and actions to close the gap • Implement and monitor results Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -13

Table 11. 2 Market Share, Mind Share, and Heart Share Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -14

Figure 11. 5 Hypothetical Market Structure 10% 20% Market Nichers Follower 30% Market Challenger Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 40% Market Leader 11 -15

Gap Tried to Appeal to Too Broad a Market Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -16

Expanding the Total Market New customers More usage Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -17

Figure 11. 6 Six Types of Defense Strategies Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -18

Figure 11. 7 Optimal Market Share Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -19

Factors Relevant to Pursuing Increased Market Share • Possibility of provoking antitrust action • Economic cost • Pursuing the wrong marketing-mix strategy • The effect of increased market share on actual and perceived quality Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -20

Other Competitive Strategies Market Challengers Market Followers Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Market Nichers 11 -21

Market Challenger Strategies • Define the strategic objective and opponents • Choose a general attack strategy • Choose a specific attack strategy Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -22

General Attack Strategies Frontal Attack Flank Attack Encirclement Attack Bypass Attack Guerrilla Warfare Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -23

Pepsi buys Gatorade in a Bypass Strategy Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -24

Specific Attack Strategies • • • Price discounts Lower-priced goods Value-priced goods Prestige goods Product proliferation Product innovation • Improved services • Distribution innovation • Manufacturing-cost reduction • Intensive advertising promotion Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -25

Market Follower Strategies Counterfeiter Cloner Imitator Adapter Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -26

Market Nicher Strategies Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -27

Niche Specialist Roles • End-User Specialist • Vertical-Level Specialist • Customer-Size Specialist • Specific-Customer Specialist • Geographic Specialist • Product-Line Specialist • Job-Shop Specialist • Quality-Price Specialist • Service-Specialist • Channel Specialist Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -28

Balancing Orientations Competitor. Centered Customer. Centered Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -29

Marketing Debate ü How do you attack a category leader? Take a position: 1. The best way to challenge a leader is to 2. attack its strengths. 3. or 4. 2. The best way to attack a leader is 5. to avoid a head-on assault and to adopt 6. a flanking strategy. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -30

Marketing Discussion ü Pick an industry. ü Classify firms according to the four different roles they might play. ü How would you characterize the nature of competition? ü Do the firms follow the principles described in this chapter? Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 11 -31